Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 2: Asian Financial Crisis
What exactly is the ‘East Asian Crisis’?
In July 1997, the markets in East and Southeast Asian were affected by a financial meltdown that began in Thailand. Due to a mix of factors, such as financial speculation and inadequate regulatory measures, the Thai government was forced to float the baht. This caused market pessimism, which led to the outflow of capital. In view of the inter-connected markets within the Southeast Asian region, the economic problems in Thailand began to spread to other neighbouring countries, like Thailand. This was known as a ‘financial contagion’.
1. Unregulated financial liberalization
One possible factor for the Asian Financial Crisis was the unregulated liberalization. Partially, this was the result of the increased liberalization of the financial sector in the 1980s. As foreign investments were welcomed as major sources of economic growth, there were minimal regulations to stem the flow of capital.
As such, the sustained economic growth boosted market sentiments, thereby creating the optimistic outlook that Southeast Asia was a potential for future growth. Thus, foreign investors funded investment activities in the region. However, financial liberalization exposed several weaknesses.
In Thailand, the Bangkok International Banking Facility (BIBF) enabled banks and finance companies to access short-term credit with low interest rates. The credit was lent to Thai borrowers to finance long-term projects with high interest rates. Therefore, the ease of credit access resulted in the expansion of BIBF loans that amounted to nearly $115 billion baht.
2. The shortcomings of a fixed exchange rate system
The second contributing factor relates to the use of a fixed exchange rate system in some of the SEA economies. A fixed exchange rate system meant that governments could determine the external value of money. Currency stabilization was an ideal consideration as it raises market confidence to promote investment and trading activities.
However, a large pool of foreign reserve was needed in order for governments to intervene in the foreign exchange (i.e. ‘forex’ in short) market and maintain the exchange rate.
Initially, the Thai baht was pegged to the American dollar (USD) at 25 baht : 1 USD. Yet, the inability to maintain the currency value had left the economy vulnerable to speculative attacks that began in November 1996. Thailand’s reserves of US$39 billion declined to US$2 billion by June 1997.
Eventually, the inability to maintain the currency peg led to the eventual floating of the baht on 2 July 1997, thus losing 17% of its value relative to the USD. Consequently, there was a plunge in investor confidence, resulting in the withdrawal of foreign capital from the regional markets.
3. Speculative attacks
The third contributing factor relates to foreign currency speculation. Short-term capital flows created exchange rate instability, which was exacerbated by market pessimism. Therefore, the outflow of capital resulted in currency depreciation.
In Thailand, foreign investors sold their baht, causing a sharp fall in the currency value. By end 1997, the baht lost 80% of its value relative to the USD. There were lingering perceptions that the neighbouring economies were also susceptible to market volatility.
Therefore, this dampened investor confidence, resulting in the subsequent outflow of capital in other economies, like Indonesia. By February 1998, the Indonesian rupiah lost 76% of its value relative to the USD.
How did the financial crisis affect the Southeast Asian economies?
In general, the massive currency devaluation led to a significant economic downturn that hampered the development of many economies in Southeast Asia, including Singapore and Indonesia.
With currency depreciation, some of these economies experienced higher unemployment and inflation rates. For instance, Indonesia was adversely affected by the Thai financial crisis. The unemployment rate in Indonesia surged beyond 6% in 1999. Gross Domestic Product (GDP) growth rate was at -15% in 1998. In Malaysia, the GDP growth rate was at -5.8% in the same year.
What can we learn from this case study?
Consider the following question:
– How far do you agree that the Asian Financial Crisis of 1997 was the result of currency speculation? [to be discussed in class]
Now that you have examined the possible contributing factors that gave rise to the Asian Financial Crisis, it is important to apply this knowledge by answering similar practice questions. You can also join our JC History Tuition. We provide additional learning resources, such as summary notes, essay outlines and case study materials.
The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.
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End of Cold War – Cartoon Analysis
/in Cold War, History SBCS/by Justin NgIn this article, we will be looking at a series of political cartoons to comprehend the interpretations of how the Cold War ended. Be familiar with the contrasting contextual interpretations shaped by the political leaders as well as the newspaper publications. By doing so, you can then better answer the source based case study questions featured in your GCE A Level History examination papers. We will be examining the third part: The End of Bipolarity
The cartoon depicts a helpless Soviet leader Gorbachev observing the fragmented symbol of the nation (‘hammer and sickle’). Contextually, Gorbachev was facing a challenging situation by 1991, as the Soviet economy was on the decline, Soviet republics broke away from USSR and the August Coup was launched against him.
The cartoon illustrates the three notable figures in the Communist world (Karl Marx, Stalin and Lenin) observing Gorbachev leading the funeral procession that represented the ‘demise of communism’. Contextually, Gorbachev improved relations with USA, as seen by INF Treaty and withdrawal of Soviet troops from Afghanistan.
The cartoon depicts the two leaders, Reagan and Gorbachev, with outstretched hands, expressing their mutual desires to improve bilateral relations in the 1980s.
The caption reads ‘clear skies for all mankind‘, which is ironic as the world was illustrated as being in peril, such as Reagan’s SDI, covert operations in South America (El Salvador, Guatemala and Nicaragua). Likewise, the Soviet occupation in Afghanistan.
The cartoon depicts a series of meetings from 1985 to 1988 that focused on arms control agreements signed between Reagan and Gorbachev, especially the INF Treaty of 1987. The caption reflects the cartoonist’s expression of relief that the world averted a nuclear confrontation as the two leaders backed down from the ‘large missile steps’
The cartoon illustrates the helplessness of Soviet leader Gorbachev in ensuring that his glasnost (openness) reforms would be carried out effectively.
The cartoon depicts the ‘powerlessness of USSR’ in which the Soviet republics (represented by the individuals holding flags) were moving away from the bear (USSR). It illustrates the inevitability of the political collapse, as seen by the 1989 Revolutions in Eastern Europe.
The cartoon was published to commemorate the 20th anniversary of the fall of the Berlin Wall. It illustrates Reagan’s ‘footprint’ making a mark in causing the end of the Cold War.
The cartoon illustrates the commemoration of former US President Ronald Reagan’s efforts in ending the Cold War, as portrayed by the collapse of the Berlin Wall that marked the physical division of Europe. Contextually, this cartoon was published one day after Reagan’s passing.
The cartoon reflects the awkward handshake between Gorbachev and Reagan in a four-panel comic, which eventually concludes with a firm version. Contextually, it depicts the breakthrough in the arms control agreement signed during the Washington Summit on 8 Dec.
How do I use these sources to ace the Source Based Case Study questions?
Make sure that you have browsed through the above cartoons to understand the interpretations. Then, try to relate them to the context of examination questions. For example, ‘How far do you agree that the two leaders of USA and USSR were responsible for the end of the Cold War?’
If you are keen to improve your thinking and writing skills, you can consider joining our JC History Tuition.
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Cuban Missile Crisis – Cartoon Analysis
/in Cold War, History SBCS/by Justin NgIn this article, we will be analyzing these political cartoons to understand the different visual interpretations of the Cuban Missile Crisis. By examining these visual texts and recognising their contexts, you will be more familiar with the interpretations to answer the source based case study questions effectively. We will be focusing on the second part: A World Divided by the Cold War – Cuban Missile Crisis.
The cartoon portrays Castro as a towering figure over two petite looking persons representing Cuba and Brazil. Castro persuades Brazil to lead a communist revolution like his. Yet, Brazil looks bewildered as Cuba is in a poor state.
In late August 1961, Cuba was facing food shortages, whereas Brazil was in debt. The cartoon was possibly meant to depict Brazil’s skepticism towards Castro’s revolution.
The cartoon depicts both superpower leaders (Kennedy and Khrushchev) feeling annoyed over their neighbour’s tree branch(es) extended into their own territory.
The intended audiences are possibly the citizens of USA and USSR in depicting superpower involvement, seen in terms of their bases in other countries (e.g. Cuba and Turkey)
Below the cartoon, the caption reads ‘What do you mean, a threat? Surely it’s all right to go fishing, isn’t it?’
The cartoonist depicts an ironic illustration of Moscow’s true motives on Cuba. In Sept 1962, an agreement was signed between Cuba and USSR for the construction of a port in the Bay of Havana, which Castro claimed to be a base for the Soviet fishing fleet in the Atlantic.
The cartoon depicts a miniature-sized Castro targeting the Soviet missile at a terrified ‘Uncle Sam’ (USA), while Khrushchev looks on from afar in delight.
The cartoon illustrates both Kennedy and Khrushchev taking part in an arm wrestling match that neither side was likely to win. They are seated on missiles that could go off anytime.
The cartoonist is trying to depict the unpredictability of the world as the crisis may lead to ‘mutually assured destruction’.
The cartoon illustrates Kennedy in The White House and Khrushchev in the Kremlin facing each other with nuclear missiles placed outside their buildings. In context, the cartoon depicts Kennedy as being hypocritical as he questioned Khrushchev about the missiles in Cuba, since there were twice as many American missiles as there are than the Russians.
The cartoon depicts Khrushchev as a dentist extracting Castro’s teeth, which is illustrated as missiles.
During the Cuban Missile Crisis, Kennedy announced that US would impose a ‘naval quarantine’ to prevent the delivery of Soviet missiles to Cuba. Khrushchev eventually backed down and agreed to remove the missiles.
How do I use these sources to ace the Source Based Case Study questions?
First, be familiar with the main perspectives of Cuba, USA and USSR in explaining their involvement in the Cuban Missile Crisis. Refer to the aforementioned article for more information.
Second, examine these cartoons and attempt to answer the following question: How far do these sources support the view that the Cuban Missile Crisis was a superpower conflict?
Third, pay attention to the date of publication and the source origin (i.e. who published it?) to consider the motive. This section will be important when you attempt to derive the provenance of each source.
If you are looking for additional help, why not join our JC History Tuition as we will teach you to organise the content and improve your answering skills.
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What were the consequences of the Asian Financial Crisis?
/in Economic Development, History Essays/by Justin NgTopic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 2: Asian Financial Crisis
The aftermath of the regional currency crisis
In view of the causes that explain how the Asian Financial Crisis began, it is important to examine its consequences. This includes the government responses that varied between Southeast Asian nations, such as the bail-out loans by the International Monetary Fund (IMF), crisis response packages and stringent financial regulatory measures.
Immediate government responses
After the Asian Financial Crisis happened, governments played a critical role in introducing immediate responses to arrest the situation.
For instance, the Thai government tried to maintain the peg by tapping on its reserves to prevent further currency depreciation, which was caused by speculative attacks. From 1997 to 1998, it was estimated that nearly US$30 billion was spent to maintain the baht.
Unfortunately, their efforts proved futile, such that the abandonment of the fixed exchange rate led to rapid currency depreciation. On 2 July 1997, the baht was allowed to float, resulting in the depreciation of the currency value by 18%. By January 1998, the value had fallen to US$1 to $55 baht.
Given the economic interconnectedness of Southeast Asian markets, the Thai economic crisis spread to other neighbouring economies, which was known as the contagion effect.
Crisis Response Measures
Another important consideration was the introduction of crisis response measures to contain the economic crisis. These measures involved large government spending to stimulate the markets and facilitate recovery.
For example, the Malaysian government formed the National Economic Action Council (NEAC) in 1998 to pursue economic stabilization. One method included the imposition of capital controls to stabilize the ringgit.
Additionally, the national asset management company, known as Pengurusan Danaharta Nasional Berhad, was in responsible for relieving the banking system of its non-performing loans (NPLs) and assets. By 30 September 2005, the Danaharta had resolved all of its NPLs. It was reported to have met its recovery target of RM30.35 billion.
In fact, Danaharta was one of the three-pronged strategy that the Malaysian government introduced to achieve stabilization of the banking system. It also included Danamodal Nasional Berhad and the Corporate Debt Restructuring Committee (CDRC).
Acceptance of IMF Bail-out Loans
Lastly, the IMF also offered to provide bail-out loans to affected Southeast Asian economies. These conditional loans required governments to accept an IMF-imposed set of policies. In particular, the IMF required recipient countries to engage in fiscal austerity (spending cuts) to correct their balance of payment deficits. Yet, these governments were not running budget deficits, thus worsening the economic slowdown.
For example, Indonesia accepted the IMF bail-out reluctantly. By the time the third agreement was introduced, the government acceded to IMF’s demands to remove subsidies on essentials, like food, medicine and fertiliser.
This proved to be disastrous, given that the loss of state support raised the cost of living and worsened socio-economic conditions. As a result, the skyrocketing basic commodity prices resulted in a surge in inflation rate. Poverty rate increased from 11% before the crisis to nearly 60% afterwards.
Furthermore, the economic instability had severe socio-political consequences that culminated in the resignation of Suharto.
What can we learn from this case study?
Consider the following question:
– How far do you agree that governments of Southeast Asian economies were responsible for the consequences of the Asian Financial Crisis? [to be discussed in class]
Now that you have learnt the consequences of the Asian Financial Crisis, it is imperative that you apply your knowledge to A Level History essay questions. You can sign up for our JC History Tuition to find out how you can organise your content and form well-analyzed essays to ace the GCE A Level History examination.
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How was national unity forged in Singapore?
/in Approaches to National Unity/by Justin NgFor this article, we will be examining the case study of Singapore to understand how national unity was achieved in Singapore. It will be important for students taking the H2 History A Level examinations to be familiar with various case studies found in the region of Southeast Asia so as to form effective comparisons.
Topic of Study [For H2 History Students]:
Paper 2: Search for Political Stability
Section B: Essay Writing
Theme I Chapter 2: Approaches to National Unity
History of the multicultural Singapore
To understand the approaches to national unity, we must first find out more about the history of Singapore. In particular, during the uncertain time when Singapore merged with Malaysia from 1963 to 1965, there were inter-ethnic tensions that threatened social stability. At the same time, political disagreements between the People’s Action Party (PAP) government in Singapore and the Alliance government in Malaysia (led by the United Malays National Organisation, UMNO) further exacerbated the problem.
As a result, the communal riots (also known as racial riots) broke out from 31 May to 6 June 1964. Historians have commented that the riots were the most severe and prolonged social conflict in post-war Singapore.
Post-1964 Singapore
After Singapore attained independence on 9 August 1965, the PAP government introduced policies that emphasized heavily on ‘multiculturalism’. Learning from the lessons of the 1964 riots, it was imperative for the government to recognise racial diversity and provide state support to protect the interests of the ethnic communities.
Approach #1: Education
One such approach involved the policy of bilingualism, which involved the study of English as the official language and the study of a ‘Mother Tongue’ (based on the ethnic categorization of ‘Chinese, Malay, Indian or Others’ – CMIO). Such an approach would be beneficial as the English language acts as a common tool for inter-ethnic communication. Likewise, the preservation of ethnic-based languages would allow communities to understand their cultural heritage.
Additionally, ever since 1997, 21 July was marked as the “Racial Harmony Day”, which was celebrated by schools annually. The purpose was to remind students on the importance of racial harmony.
Approach #2: Legislation
Another important approach involves the use of legislation for the institutionalization of racial harmony. On 9 November 1990, the “Maintenance of Religious Harmony Act” was passed. Its purpose was to prohibit the politicization of religion for subversive purposes. At the same time, the Presidential Council of Religious Harmony was set up, which was responsible for the execution of this act.
Additionally, the Sedition Act was enforced to prevent the spread of ill will by any individuals or organizations with malicious intent to cause racial and religious divisions in Singapore.
Therefore, these approaches have proven to be effective in ensuring the maintenance of national unity in Singapore, as observed by the absence of serious inter-ethnic tensions and conflicts from independence to 2000.
What can we learn from this article?
Consider the following question:
– How far do you agree that education is the most important approach to forge national unity in Singapore? [to be discussed in class]
Now that you have examined the approaches of the Singapore government in forging national unity, it is important you apply them to JC History essays. Join our JC History Tuition to find out how you can organise your answers and form persuasive arguments effectively. We also provide summary notes and essay outlines for effective revision. Get started to ace your GCE A Level History examinations!
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What are the main aims of economic development?
/in Economic Development, History Essays/by Justin NgNicholas Tarling’s three aims
According to the distinguished historians, Nicholas Tarling and Norman Owen, who published The Cambridge History of Southeast Asia, there are three aims of economic development: growth, equity and nationalism. We will be examining the significance of these aims individually to understand why there is a high degree of government intervention in the post-independence Southeast Asian states.
Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development
Aim #1: Economic Growth
One of the most common aims of economic development involves economic growth, which is typically measured in the monetized value of the goods and services produced within a country, seen in terms of Gross Domestic Product (GDP).
To assess the economic performance of a country, it is important to examine the ability of governments to achieve short-term and long-term economic growth.
Also, another relevant aspect is the percentage share of GDP contributed by the three sectors: agriculture, industry and finance. As a country advances, a large proportion of growth is derived from the secondary and tertiary sectors (industry and finance).
Aim #2: Economic Equity
The second aim involves the reduction of income gap between the rich and the poor. In some Southeast Asian states, leaders advocate the equality of opportunity, which can be measured by the percentage of population that suffering from poverty.
As such, their policies are extensively focused on a more equitable distribution of resources. For example, governments introduce legislation to facilitate land reforms for state acquisition and re-distribution to rural households.
Aim #3: Economic Nationalism
The third aim refers to the indigenization of wealth and production to reduce foreign ownership of domestic sectors of economy. Following the process of decolonization, many Southeast Asian states sought to reduce foreign influence in their economic development.
This aim is usually achieved by implementing policies of nationalization. The governments impose strict controls to limit or eradicate foreign ownership. At same time, state-owned enterprises are formed to replace these foreign companies. For example, in Indonesia, the Dutch assets in petroleum were nationalized, thus forming the Permina, known as the state-owned oil company. Later, it was renamed as Pertamina.
What can we learn from this article?
Consider the following question:
– The pursuit of economic growth is the most important aim that Southeast Asian governments should prioritize on after independence. Discuss. [to be discussed in class]
Now that you have examined the three aims of economic development, you should look for practice questions to apply your knowledge. You can also join our JC History Tuition as we provide summary notes and practice questions (with reference answers) to demonstrate the applicability of knowledge for examinations.
The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.
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What is the ASEAN Way?
/in History SBCS, Regional Conflicts and Cooperation/by Justin NgTopic of Study [For H2 History Students]:
Paper 2: Regional Conflicts and Co-operation
Source Based Case Study
Theme III Chapter 2: ASEAN (Growth and Development of ASEAN : Building regional peace and security)
What is the ‘ASEAN Way’?
The ASEAN Way is a guiding principle that shapes the approach of member nations in Southeast Asia for conflict management. It emphasises heavily on consultation and consensus-building, which later inspired the introduction of other forms of political co-operation, like the Treaty of Amity and Co-operation (TAC).
As pointed out by the former Secretary-General of ASEAN, Rodolfo Severino, in a public address, the ASEAN Way “has served Southeast Asia well” by “moving its members from animosity to the close co-operative relationship that they enjoy today”.
Origins of the ASEAN Way
Following the formation of the regional organization in 1967, member nations had to learn from past errors as well as on-going disputes. One such incident involved the “Corregidor affair” (1968), which broke out due to the territorial disputes over Sabah. Similarly, the Confrontation (Konfrontasi) of 1963 was a contentious issue that strained diplomatic relations between affected member nations. Therefore, the ASEAN Way was implemented to encourage the use of diplomacy rather than forceful means to resolve conflicts.
Interestingly, the ASEAN Way was inspired by Malay culture, seen in terms of musjawarah (consultation) and muafakat (consensus-building). This practice involves a gradual decision-making process, in which all member states must be consulted before the regional organization can come to a consensus on the possible course of action to undertake.
How does it work?
One of the core principles of ASEAN Way involves the ‘principle of non-interference’. Should one or a few member nations disagree with the proposals put forth during the ASEAN meetings, the organization must postpone the decision-making for future settlement.
The main purpose of this cautious approach is to provide adequate time for considerations and prevent the outbreak and escalation of tensions. Therefore, regional stability can be maintained.
Subsequent impacts on ASEAN’s political framework
Following its inception in the 1960s, ASEAN has evolved over time in response to the changing international climate. The ASEAN Way was implemented in the form of institutionalized forms of co-operation.
One such example is the Zone of Peace, Freedom and Neutrality (ZOPFAN) Declaration (1971). Against the backdrop of the Cold War, these Southeast Asian member nations asserted a firm position to be free from external interference to prevent ideological manipulation.
Another application is observed in the Treaty of Amity and Co-operation (TAC) that emphasises heavily on amicable co-operation among member nations and non-ASEAN countries. The TAC endorses the practice of cautious diplomacy that focuses on the compartmentalization of contentious issues.
The most important case study that can be used to examine the significance of the ASEAN Way is the Third Indochina War (1978-1991) as it arguably provided a timely opportunity to display ASEAN’s solidarity to the rest of the world.
What can we learn from this article?
Consider the following question:
– Assess the success and limitations of the ASEAN Way in managing regional conflicts in Southeast Asia since 1967 [to be discussed in class].
Now that you have examined the fundamental concepts of the ASEAN Way, it is imperative that you explore and attempt source-based case study questions. You can also consider signing up for our JC History Tuition to find out how you can apply your knowledge to answer similar questions that are based on past examination papers.
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Why was the ASEAN established?
/in History SBCS, Regional Conflicts and Cooperation/by Justin NgTopic of Study [For H2 History Students]:
Paper 2: Regional Conflicts and Co-operation
Source Based Case Study
Theme III Chapter 2: ASEAN
What is ASEAN?
On 8 August 1967, the Association of Southeast Asian Nations (ASEAN) is a regional organization that was established. The foreign ministers of five Southeast Asian countries – Malaysia, Indonesia, Singapore, Philippines and Thailand – signed the historic document, known as the ‘ASEAN Declaration‘ in Bangkok, Thailand.
In the 1980s and 1990s, ASEAN expanded its membership by including other neighbouring countries, like Brunei (1984), Vietnam (1995), Laos and Myanmar (1997) and Cambodia (1999).
The aims and purposes of ASEAN
Within the ASEAN Declaration, it outlined what ASEAN was meant to achieve objectives such as:
In view of these efforts, it is important to consider the challenges that countries in the Southeast Asian region encountered in the 1950s and 1960s to understand the rationale behind its establishment.
Factor #1: Maintenance of regional security
Before ASEAN was formed, there were inter-state tensions that gave rise to conflicts. These conflicts threatened the security of affected countries, including those in the neighbouring zones. For instance, the Konfrontasi (Confrontation) was a controversial foreign policy that affected the political stability of nations, like Singapore and Malaysia. Following the de-escalation of the tumultuous phase, the formation of ASEAN would help to mend the diplomatic ties of the affected countries and encourage Indonesia to adopt a more collaborative position.
Furthermore, following the Suez Crisis, the British announced the withdrawal of its military from the region by 1971. This move raised security concerns for Singapore as its small and vulnerable state could expose the country from any potential external threat. Therefore, the formation of a regional organization (i.e. ASEAN) would arguably compensate for the departure of the external powers.
Factor #2: Assertion of an independent region free from external interference
In view of the Konfrontasi, Southeast Asian nations formed the regional organization to promote accommodation and collaboration between one another. Although some of these member nations held contrasting perspectives towards co-ooperation with external powers, there was a general consensus that ASEAN would become the central focus in promoting intra-ASEAN engagement.
For example, Singapore was supportive of the formation as it would lead to the increased accessibility of the region’s markets. Following the ‘Separation’, Singapore was in dire need of economic support from abroad to facilitate its economic nation-building efforts. In 1967, it was estimated that Southeast Asia had a combined market of more than US$280 million. Hence, intra-ASEAN trade would no doubt be beneficial for member nations.
What can we learn from this article?
Consider the following question:
– Assess the view that security reasons were the most important in explaining the formation of ASEAN in 1967 [to be discussed in class].
Now that you have learnt the reasons that explain the formation of ASEAN, we strongly encourage you to attempt related source-based case study questions to review your knowledge application skills. Alternatively, you can join our JC History Tuition as we provide numerous practice questions and review your answers to ensure that there is progressive learning.
The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.
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What caused the Asian Financial Crisis in 1997?
/in Economic Development, History Essays/by Justin NgTopic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 2: Asian Financial Crisis
What exactly is the ‘East Asian Crisis’?
In July 1997, the markets in East and Southeast Asian were affected by a financial meltdown that began in Thailand. Due to a mix of factors, such as financial speculation and inadequate regulatory measures, the Thai government was forced to float the baht. This caused market pessimism, which led to the outflow of capital. In view of the inter-connected markets within the Southeast Asian region, the economic problems in Thailand began to spread to other neighbouring countries, like Thailand. This was known as a ‘financial contagion’.
1. Unregulated financial liberalization
One possible factor for the Asian Financial Crisis was the unregulated liberalization. Partially, this was the result of the increased liberalization of the financial sector in the 1980s. As foreign investments were welcomed as major sources of economic growth, there were minimal regulations to stem the flow of capital.
As such, the sustained economic growth boosted market sentiments, thereby creating the optimistic outlook that Southeast Asia was a potential for future growth. Thus, foreign investors funded investment activities in the region. However, financial liberalization exposed several weaknesses.
In Thailand, the Bangkok International Banking Facility (BIBF) enabled banks and finance companies to access short-term credit with low interest rates. The credit was lent to Thai borrowers to finance long-term projects with high interest rates. Therefore, the ease of credit access resulted in the expansion of BIBF loans that amounted to nearly $115 billion baht.
2. The shortcomings of a fixed exchange rate system
The second contributing factor relates to the use of a fixed exchange rate system in some of the SEA economies. A fixed exchange rate system meant that governments could determine the external value of money. Currency stabilization was an ideal consideration as it raises market confidence to promote investment and trading activities.
However, a large pool of foreign reserve was needed in order for governments to intervene in the foreign exchange (i.e. ‘forex’ in short) market and maintain the exchange rate.
Initially, the Thai baht was pegged to the American dollar (USD) at 25 baht : 1 USD. Yet, the inability to maintain the currency value had left the economy vulnerable to speculative attacks that began in November 1996. Thailand’s reserves of US$39 billion declined to US$2 billion by June 1997.
Eventually, the inability to maintain the currency peg led to the eventual floating of the baht on 2 July 1997, thus losing 17% of its value relative to the USD. Consequently, there was a plunge in investor confidence, resulting in the withdrawal of foreign capital from the regional markets.
3. Speculative attacks
The third contributing factor relates to foreign currency speculation. Short-term capital flows created exchange rate instability, which was exacerbated by market pessimism. Therefore, the outflow of capital resulted in currency depreciation.
In Thailand, foreign investors sold their baht, causing a sharp fall in the currency value. By end 1997, the baht lost 80% of its value relative to the USD. There were lingering perceptions that the neighbouring economies were also susceptible to market volatility.
Therefore, this dampened investor confidence, resulting in the subsequent outflow of capital in other economies, like Indonesia. By February 1998, the Indonesian rupiah lost 76% of its value relative to the USD.
How did the financial crisis affect the Southeast Asian economies?
In general, the massive currency devaluation led to a significant economic downturn that hampered the development of many economies in Southeast Asia, including Singapore and Indonesia.
With currency depreciation, some of these economies experienced higher unemployment and inflation rates. For instance, Indonesia was adversely affected by the Thai financial crisis. The unemployment rate in Indonesia surged beyond 6% in 1999. Gross Domestic Product (GDP) growth rate was at -15% in 1998. In Malaysia, the GDP growth rate was at -5.8% in the same year.
What can we learn from this case study?
Consider the following question:
– How far do you agree that the Asian Financial Crisis of 1997 was the result of currency speculation? [to be discussed in class]
Now that you have examined the possible contributing factors that gave rise to the Asian Financial Crisis, it is important to apply this knowledge by answering similar practice questions. You can also join our JC History Tuition. We provide additional learning resources, such as summary notes, essay outlines and case study materials.
The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.
We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.
How did Myanmar develop its economy?
/in Economic Development, History Essays/by Justin NgOverall Economic Assessment of Myanmar
After Myanmar attained independence on 4 January 1948, the government pursued economic development, which is strongly guided by nationalistic and socialist influences. In view of the political challenges, there was strong government intervention. Over time, the military took a prominent role in maintaining political stability, while guiding the development of the economy. By the 1980s, Myanmar engaged in economic liberalization, encouraging the inflow of private investment.
Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development
1948 to 1962: U Nu’s Democratic Governance
Before Myanmar attained independence, the British colonial powers transformed its economy by focusing in agricultural production. By 1930s, nearly two-thirds of the labour force were involved in the agrarian sector. Following World War II, the devastation caused by war left many infrastructure in ruins.
Therefore, the government embarked in the Pyidawtha Plan, which is a eight-year economic plan that set higher targets for growth. The purpose was to rebuild the public infrastructure for economic recovery. Due to the high degree of foreign ownership in the economic sectors, nationalisation became one of the foremost approaches. For instance, the Land Nationalisation Act (1948) was passed to facilitate the consolidation and re-distribution of land for agricultural development.
1962 to 1988: Ne Win’s Burmese Way to Socialism
However, the country was faced with political instability due to internal divisions. Military intervention became necessary to restore stability, thus paving the way for the rise of Ne Win’s leadership. Ne Win’s military government centralised its economic development based on the ideology of ‘Burmese Way to Socialism’, which placed great emphasis on state control across economic sectors.
For example, the Burma Oil Company used to be a joint venture during U Nu’s time. In 1963, this company was nationalised. Likewise, in the banking sector, the government maintained a tight control to ensure that all domestic capital was in the hands of the state. As for the agricultural sector, the Tenancy Law (1965) was passed, which facilitated land redistribution.
1988 to 1997: State Law and Order Restoration Council (SLORC)
Following the resurgence of democratisation in the 1980s, the government engaged in economic liberalisation. The financial sector benefited from this increased openness, as seen by the Foreign Investment Law (1988). This law allowed foreign companies to invest in local ventures. Furthermore, the Financial Institutions Law (1992) was passed to allow the establishment of private commercial banks.
As a result of economic liberalisation, Myanmar’s Gross Domestic Product (GDP) increased by 7.3% per year in the period of 1992 to 1997. Additionally, financial openness contributed to greater inflow of foreign direct investment (FDI), which approximated at US$2.8 billion at one point in time.
In summary, the strong government intervention was a common feature in Myanmar throughout the time period since independence to 1997.
What can we learn from this case study?
Consider the following question to understand this country-specific case study:
– Assess the role of the government in shaping the economic development of Myanmar after independence. [to be discussed in class]
Now that you have considered the strategies employed by the government in guiding economic development of Myanmar, it is important to apply this knowledge by writing A Level History essays. Alternatively, you can sign up for our JC History Tuition. We provide summary notes, essay outlines and source-based case study question answers for effective revision.
The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.
We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.
What caused the economic miracle in Vietnam?
/in Economic Development, History Essays/by Justin NgThe post-unification Vietnam
After the prolonged military confrontation between the Vietnam and the French/Americans (Indochina Wars), the unified Vietnamese economy was relatively unstable. Due to strong government intervention, swift resource consolidation was achieved. Fast forward to the 21st century, Vietnam is recognised as one of the leading emerging economies.
Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development
1976-1985: Post-unification Vietnam
The Second Five-Year Plan (1976-1980) focused on two major areas – agricultural development and industrialization. For the agriculture sector, the New Management System was established to facilitate large-scale collectivisation. For industry, the government held strong control over many private sectors.
Although there were setbacks to the Second Five-Year Plan, the government persisted, as observed by the Third Five-Year Plan (1981-1985). The latter focused on the policy of decentralisation, in which there was greater private economic participation. For example, peasants in the agriculture sector were allowed to sell their produce in the open market, thereby facilitating the development of a ‘family economy’.
1986-1996: ‘Doi Moi‘
In 1986, the Doi Moi (renovation) was introduced. In short, it focused economic liberalisation. One of the most significant policies involved the Foreign Investment Law (1987). This law allowed greater foreign ownership and provided greater incentives for export production. In 1990, the Vietnamese government set up four commercial banks.
In the agriculture sector, the government introduced Resolution 10, which involved the de-collectivisation of agriculture. The Land Law and Agricultural Land Use Law were introduced.
As a result, economic liberalisation contributed to the rapid economic growth in Vietnam. From 1992 to 1997, its Gross Domestic Product (GDP) rate was 8% per annum. By 1996, Vietnam received foreign direct investment (FDI) that was estimated at US$8.5 billion per year. Furthermore, Vietnam became the third largest exporter in the world.
What can we learn from this case study?
Consider the following question to understand this country-specific case study:
– How far do you agree that resource consolidation is the most important government strategy in developing the economy of Vietnam after 1975? [to be discussed in class]
Now that you have studied the government strategies that shaped the Vietnamese economy, it is imperative to review your knowledge application by writing essays. You can also sign up for our JC History Tuition. We provide condensed learning materials and essay outlines for references and revision.
The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.
We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.